MADRID — Prime Minister Mariano Rajoy will opt for caution rather than bold new reform in his second term in power, preferring not to subject Spain's economic stability to the whims of a hostile parliament.

With his Popular Party largely isolated in Congress and beset by corruption scandals, the 62-year-old conservative leader shows signs of hunkering down in his La Moncloa residence until 2019 or 2020.

Rajoy's own public utterances appear to reinforce that view: “There’s not going to be an early election,” he said last month. “After the nonsense of 2016, don’t count on me to generate instability in Spain.”

By "nonsense," he means the political turmoil that left Spain without a functioning government for 10 months, between two national elections. One consequence was that the budget for 2017 could not be passed until last week, when Congress (the lower house of parliament) approved it and sent it to the Senate, where the PP does have a majority.

Setting a low bar for political ambition, Rajoy hailed the much-delayed passing of the 2017 budget as a milestone that he hopes will help create jobs and project "trust" inside and outside Spain's borders. The prime minister has advised business leaders not to expect anything much more intrepid than that from his government, seeing that his Popular Party has just a third of the seats in Congress.

“My biggest concern right now is not to make reforms — which it is doing — but to maintain the reforms that have already been accomplished,” he told a business conference last month. Those include reforms in areas such as banking, energy and the labor market carried out during his first mandate, when he had an absolute majority in the lower chamber.

Spanish Prime Minister Mariano Rajoy takes his seat prior to the start of the second day of debate of amendments to the general budget 2017 at the Parliament's lower chamber in Madrid | Fernando Villar/EPA

Rajoy warned against an opposition push to reverse some of his reforms. “I believe this would be a disastrous message,” he said.

Hold onto power

Lucía Méndez, a political analyst for newspaper El Mundo, interprets this as meaning that Rajoy will sit tight in La Moncloa “but without any action of government.”

“Barring a catastrophe, he will hold to power during his mandate and will try to put off the elections as far as possible,” she said.

The conservative leader's defensive stance is due, at least partly, to the return of Pedro Sánchez as leader of the Socialist Workers' Party (PSOE). He resigned last October then won a party primary last month on a promise to toughen up his stance against the PP — meaning Rajoy can expect little cooperation save on matters of state such as the Catalan crisis, terrorism or foreign policy.

In this context, the Popular Party is already struggling to get legislation through Congress — the best example being an EU-mandated reform of port services. In March, a first bill was defeated, representing only the second time since 1979 that lawmakers have rejected legislation via royal decree. In May, Rajoy had to resort to the help of a pro-independence Catalan party to get the port bill ratified in the lower house; he now faces a strike by dockers that threatens Spain's export industry.

The budget and the port services reform are two of just seven cabinet initiatives that Rajoy has managed to get approved in Congress so far this year.

No country for coalitions

At a time of unprecedented fragmentation in the Spanish parliament, other political parties may also find it less appealing to strike agreements with the Popular Party because of the series of corruption scandals dragging its reputation through the mud.

On July 26, Rajoy will become the first sitting prime minister of the country to appear as a witness in court, in a massive corruption case. A Congress commission into the alleged illegal financing of his Popular Party is underway and more corruption cases involving his PP are awaiting trial.

The corruption scandals also makes calling an early election — which Rajoy can do whenever he pleases — a much more unpredictable option, meaning he is even more likely to dig down until he has to call an election, by 2020 at the latest. A poll for newspaper Abc this week, for example, had the conservatives on 30.7 percent of voter intentions, down from their 33 percent of votes in last elections one year ago.

Manuel Arias, a politics professor at the University of Málaga, said pending structural reforms are “impossible” in the current context, but the reason is not so much Rajoy himself as “the dynamics of government and opposition in a country without a tradition of national [coalition] deals.”

This inertia arguably finds Rajoy in a more comfortable position to wait it out than he was a few years ago.

The prime minister is no longer struggling to keep the economy afloat: Spain has had one of the highest growth rates in Europe for three years in a row and is cutting unemployment at the rate of half a million people a year. The government forecasts it will reduce joblessness to 11 percent in 2020, from the current 18.75 percent and the 2013 peak of 27 percent.

That doesn’t mean that the country doesn’t need reforms, as the European Council reminded Madrid last week in a report. It recommended action to tackle temporary employment (calling it “one of the highest shares” in the EU), improve weak education results that hamper productivity and tackle protectionism in professional services such as engineers or architects.

Cross-party committees in Congress are currently studying reforms in areas like state pensions, which account for about 40 percent of public revenue, and education, where Spain has one of the highest drop-out rates in Europe. Deputies are also looking at the constitution, which may provide a window of opportunity for a negotiated solution to the Catalan independence issue.

Politics professor Arias sees Rajoy’s current term as a paradox.

“On one hand, a good opportunity for reform is wasted,” he said. “On the other, by nailing his colors to the mast of the budget, Rajoy is sparing Spain from inter-party turbulence and — with the economy growing — making us a point of reference in Europe."